Home Bank Money Short Make Amount Pay Borrower

Most Americans cannot "afford" (be able to pay for) a home with cash, so they have to "take out" (borrow) a loan known as a mortgage. The home itself is put up as "collateral" (what the bank will receive if the borrower is not able to make payments). Unfortunately, this means that if the home owner becomes unable to make payments "on schedule" (when they are due), perhaps due to "unemployment" (not having a job) or a medical "condition" (illness or injury), the bank may "foreclose" on the property.

Banks usually give the borrower several opportunities to make the "outstanding" (not paid on time and still owed) payments, but after a certain period of time the "lender" (the person who gave money for the loan) "initiates" (begins) the foreclosure process. The home owners are "evicted" (forced to leave the home). Then the bank usually makes any necessary repairs and then tries to sell home, often for less than its "market value" (how much the home is worth; how much other people are willing to pay for the home).

Some home owners try to avoid losing their "equity" (the amount of money one has paid toward the home) by negotiating with their lender. These negotiations sometimes result in a "short sale" where the home is sold for less than the amount of money that is still owed on the loan. This is especially common in places where home prices are falling and many people are "underwater" (owing more on a mortgage than the home is worth). The bank agrees to the short sale because receiving some amount of money is better than nothing at all. A short sale usually involves lower fees and other costs than a foreclosure, so it can be "beneficial" (helpful) to both the lender and the homeowner.